A liberal success over many decades has been to protect the tax-free status of books and newspapers. A tax on books would be abhorrent as it would be a tax on free speech.
A democratic, civilised society requires the free exchange of ideas, information and art in books. Books are vital for people, young and old, who wish to educate themselves and improve their prospects.
E-books (for the unitiated, books in electronic form) in the UK have, however, been made subject to VAT at 20%. This is a gross injustice that fails to recognise that the e-book is simply a modern format with the same vital function as a book on paper.
This is a tax that should be scrapped and Liberal Democrats should lead the fight. I have launched an online petition that people can sign here.
On a related topic, Neelie Kroes, Vice-President of the European Commission, is calling for a single market (or a free market if you prefer) in e-books and wrote about this in the Guardian yesterday.
* Antony Hook was a Liberal Democrat MEP for South East England (2019) and has practised as a barrister since 2003. He is currently Leader of the Liberal Democrat Group on Kent County Council.
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18 Comments
Yes yes and yes, I’ve been talking about this for ages, but having spoken to an MP apparently to make E-books vat exempt or even vat-reduced requires the EU to pass legislation to that effect, the UK gov can not alone decide what tier of VAT taxation an object sits at (only the level at which we tax those levels)
This is incredibly frustrating if true, the idea that an e-book is any different as a product that a paper book is ridiculous.
I’m not convinced that not exempting books from VAT would be abhorrent and am tempted to say the better solution is to extend VAT to paper books and newspapers.
Should Kindles be VAT-free by the same logic? Computers? Pens? Paper? Electricity? Educational DVDs? Non-educational DVDs? Shall we see if we can make the VAT system even more ridiculous?
Bravo it may not happen immediately but its a start.
E-books also require less natural resources, are not shipped around and therefore do not contribute to congestion or pollution and……I’m an addict firstly on a Sony reader I got several years ago as a present and latterly on my iPad…
OK the last point is probably not a good one to base a tax decision on..
I agree with Adam that books are not as vital as food, water, or medical assistance. Some books are certainly informational, but by no means all of them.
Tax is simply a contribution to the costs of providing the governance services that maintain and improve the arrangements of civilzation whioch includes things that allow e-books to be created. Not to tax the books would make those costs externalities that have to be paid by people who, by definition, are not receiving the benefits of the books!
Firstly, look at the difference between “Exempt” and “Zero rated” folks.
Exempt means not liable to VAT at all and no right to deduct input VAT on the costs incurred in making them. Zero-rated means liable to VAT (and therefore credit for input tax ) at the zero rate.
The zero-rating of books and newspapers comes from Purchase Tax days, when the words printed matter were used. Technology has overtaken this , and the whole subject should be looked at again.
The cause is on the face of it laudable, but I’m not sure that I can totally agree. The “addition to knowledge” argument I can understand, but fiction and the like ? Add to knowledge? Educational?
A better way would be to move them , and printed matter such as “newspapers and magazines” to the reduced rate. And, heresy in this, all books to the reduced rate (from zero)
State schools couldn’t argue against this, as they get input tax deduction through the local authorities etc, And 5% on the cost of your “Model Engineer” or “Crochet Monthly” is little in the scheme of things.
It’s worthy of debate, but there are other ways to level the field other than zero-rating e-books.
You have a problem in that e-books are commonly purchased from Amazon, with a tax haven in Jersey. At least by VATing the books one buys on a Kindle there is a contribution to the exchequer where otherwise you’d be letting a service go free.
“Should Kindles be VAT-free by the same logic? Computers? Pens? Paper? Electricity? Educational DVDs? Non-educational DVDs? Shall we see if we can make the VAT system even more ridiculous?”
Provided content is available DRM-free, such as is the case with Tor books, then no, literature avilable in an open format (eg – pub) without usage restrictions should in no way be considered as inseparable from the device it is read upon.
Anthony – thank you, signed.
I don’t believe this is allowed under EU law, but you could certainly rate both e-books and paper books at 5%.
In principle I agree that zero rating should be extended to e-books in the interests of knowledge promotion etc.
But … The marginal cost (the cost of selling one additional copy) of an e-book is nearly zero creating strong economies of scale and giveing a big impetus towards monopoly. So reducing the tax would simple fill the pockets of the dominant provider – Amazon. Contrast this with the old model where bookshops were naturally segmented by geography so preserving for many years a diverse distribution network that was never in danger of falling under anyone’s control.
Monopoly in knowledge and information is even more dangerous to cherished liberal principles than monopoly in general. Think Murdoch for instance.
So, any move to zero rate e-books should be accompanied by a matching move to address monopoly issues. This might be done for instance by levying a tax where the rate is progressive above some benchmark market share – for instance 0% for market shares of up to 5% then increasing by 1% for every percent increase in market share.
This article is ridiculous.
Making printed literature tax free made sense when it was the expensive and the only way to spread precious information. Now we are as likely to be informed and educated by tv, the internet, phones, other people or many other ways. And printing and literature is dirt cheap. There is no justification for taxing tv’s or cd’s or computers more heavily than books or magazines. You are just as likely to be educated by a tv or computer as a book. Are you really claiming that 50 shades of grey, or heat magazine, or the Sun are vital educational tools, desperately in need of a tax break?
Printed literature should be taxed at the same rate as everything else. Either that or all information spreading items should be taxed at some intermediate rate, say 10% to recognise their role as both educational and entertaining.
@ Robson – it is the idea that EU law is immutable that should not be allowed!
Personally I wouldn’t call something extorted by a monopoly under pain of punishment a “contribution”.
Tax is certainly a contribution. It’s just not a voluntary one. But, we freely elect the government that determines how much we should pay, so in the long term it doesn’t have the same wholly compulsory characteristic that a payment to organized crime might have. We can vote to change the tax we are taxed.
Hah! That has never worked for me.
I am more annoyed that if I buy an e-book on Amazon I can’t sell it or give it away. There is a good market in cheap second hand books. Why doesn’t the government force Amazon to allow you to resell your kindle books? (It is technically possible)
Thank you for some interesting comments. I shall try to reply to some:
Steve Way – yes, you are right the green nature of e-books is an attraction. In addition the point has been made to may about equality for those with visual impairment. Someone made the point to me there are many papers books she cannot read if the type is too small. An e-book reader can enlarge the text or change the typeface to address these problems.
Jedi – I am pleased we have found common ground 😉
Robson – we musn’t let governemnt with blaming EU law as often as they do. EU law is not written in stone. It is made by the Council and by the Parliament. If the UK government says “we can’t because of EU law” they should also say “we will propose and vote for change in the Council”.
Liberal Eye – yes the risk of creation of monoply is a really good point. It may be worth requiring manfufacturuers of e-book readers to allow users to download e-books from any seller. This is akin to the requirements on computer manufacturers to allow users to install software from more than one supplier (e.g. dealing with Microsoft’s monoploy).
Stephen W – I am unaware of anyone who has obtained entry to a profession, or a serious educational qualification, purely by watching television. Also, I don’t see that any of us are entitled, or qualifed to create some kind of hierarchy in literature. I do not see that I (or a policy maker) has a ny right to say that the items you mention (some would add religious texts to the list) are worth less than others and deserved to be taxed. The point about free speech (including free from tax speech) is that everyone’s speech should be free. If my speech is free but not someone else’s because I think it is worth less, that is not really a society based on free speech.
Tim – You make a good point. I think that is one of the issues the Neelie Kroes and the Commission is looking at when they talk about a single market in e-books.
Mr Hook, good on you for responding, but I still think you make no sense.
How is literature more free speech than TV or the Internet?
So you refuse to “establish a hierarchy among literature”, but you think computers have no educational value?
And yes, I can think of people who have gained serious qualifications using only computers, or at least relying vastly more on computers than magazines or paperback fiction. Are you seriously suggesting otherwise?
I’m sorry but you can’t demand all literature be VAT free as a matter of moral principle, because some literature is educational or informational, and this apparently sanctifies the rest, but then not care at all if other items that are equally educational or useful to free speech are taxed. It’s inconsistent rubbish. If you had any consistency you would have to demand that all information transferring technology be VAT free. But that obviously starts to become nonsense.
The problem is that your position is already ridiculous. If taxes on information or knowledge are morally unacceptable then we must have income tax rebates for all spending on educational or informational materials. VAT is nothing special just because it is levied on consumption not income. So we desperately need an income tax rebate on all phones, tv’s, computers, tablets, books, paper, etc, because speech must be free from tax? I don’t mean to satirise your position, but it genuinely seems that is the logical extension of the argument you have made.
And free speech is a legal right, not a financial one. Freedom of assembly is another legal right. But that doesn’t mean it’s morally unacceptable to have taxes on transportation. We tax things to raise money to support general and public goods, not in an attempt to destroy various freedoms or rights, nor to express personal disapproval on those actions. You say you don’t have any right to decide some literature is better than other literature. Fine. I don’t see why someone who gets his news off the internet should pay more tax than someone who gets it out of a newspaper. I don’t see why someone who likes to relax by listening to CD’s should pay more tax than someone who likes to read magazines. How can you justify treating literature so differently?